EXHIBIT 10.6
THIS ACQUISITION AGREEMENT dated as of August 30th, 2004 (this
"Agreement"), is made and entered into by and among Systems Evolution Inc., a
Texas corporation and Systems Evolution Inc., an Idaho corporation ("Buyer"),
and Duration Software Inc., a Texas corporation ("DSI") and the individual
parties listed on Exhibit A hereto (jointly, severally and collectively the
"Seller").
WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement, the respective Boards of Directors of Buyer and the Seller have
approved an acquisition of Seller by Buyer (the "Acquisition"), in connection
with which all of Seller's interest will be conveyed to Buyer in consideration
of the purchase price set forth below (together with the other transactions
contemplated by this Agreement, the "Transactions");
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Transactions;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE 1)
THE TRANSACTIONS
a) Closing Date. The closing of the Transactions (the "Closing") shall
take place at the offices of the Seller in Stafford, Texas, as soon as
practicable after the satisfaction or waiver of each of the conditions set forth
in Article IV hereof or at such other time and place and on such other date as
Buyer and Seller shall agree; provided that each of the closing conditions set
forth in Article IV hereof shall have been satisfied or waived at or prior to
such time. The date on which the Closing occurs is herein referred to as the
"Closing Date."
b) The Transactions. Subject to the terms and conditions of this
Agreement:
(a) On the Closing Date, the interest holders of Seller, based
upon ownership of Seller as listed in Exhibit A, shall tender
to Buyer all interest in and to Seller and receive from Buyer
the purchase price consideration set forth below (the
"Purchase Price") pro rata according to their share ownership
in the Seller as listed in Exhibit A.
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(b) The Purchase Price shall consist of: (i) five (5) checks in
the total amount of four hundred fifty thousand Dollars
($450,000.00) made payable to Xxxxxxxxxxx X. Xxxxxxxxxx for
$128,651.25, Xxxxx X. XxXxxxxxx for $82,713.75, Xxxxxxx X.
Xxxxxxx for $97,365, Xxxxx X. Xxxxxxx for $80,490, D. Xxxxx
Xxxxxxx for $60,780; (ii) five (5) promissory notes ("Notes"),
in the form attached hereto as Exhibit B, made payable to
Xxxxxxxxxxx X. Xxxxxxxxxx for $84,171, Xxxxx X. XxXxxxxxx for
$66,171, Xxxxxxx X. Xxxxxxx for $59,142, Xxxxx X. Xxxxxxx for
$53,142, and D. Xxxxx Xxxxxxx for $37,374 in three (3) equal
installments with no interest thereon annually thereafter
commencing on February 1st, 2005 and ending on February 1st,
2007 ("Final Payout"); and (iii) fifteen million (15,000,000)
shares of restricted Common stock of Systems Evolution Inc.,
an Idaho corporation which is publicly traded on the OTCBB
under the symbol "SEVI" ("Buyer Common Stock") with stock
certificates made out to Xxxxxxxxxxx X. Xxxxxxxxxx for
4,208,550 shares, Xxxxx X. XxXxxxxxx for 3,308,550 shares,
Xxxxxxx X. Xxxxxxx for 2,957,100 shares, Xxxxx X. Xxxxxxx for
2,657,100 shares, and D. Xxxxx Xxxxxxx for 1,868,700 shares.
(c) Any Seller that voluntarily leaves the employ of the Company
shall forfeit all monies due for their individual notes
payable as defined in ARTICLE I, section 1.2(b), which have
not been paid to that point in time.
(d) The note payable due to Xxxxx X. XxXxxxxxx'x shall decrease as
follows should any Seller voluntarily leave the employ of the
Company: by 28.057% for Xx. Xxxxxxxxxx; by 19.714% for Xx.
Xxxxxxx; by 17.714% for Xx. Xxxxxxx; by 12.458% for Xx.
Xxxxxxx, which have not been paid to that point in time.
(e) The Purchase Price and the corresponding initial checks shall
be adjusted downward in a pro rata format for Seller's total
indebtedness exceeding $200,000, e.g. Current Assets plus A/R
minus Liabilities outlined in Schedules 2.2(d) and 2.2(e).
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ARTICLE 2)
REPRESENTATIONS AND WARRANTIES
a) Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller that:
(a) Organization. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the
state of Texas and the state of Idaho. Buyer has all requisite
corporate power and corporate authority to own, lease and
operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to
be so organized, existing or in good standing would not have a
Material Adverse Effect on the financial condition of Buyer
and its subsidiaries, taken as a whole (a "Buyer MAE"). Buyer
is duly qualified to do business, and is in good standing, in
each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified would not
have a Buyer MAE. Buyer has heretofore delivered to Seller
true and complete copies of Buyer's Certificates of
Incorporation, as amended, and Buyer's bylaws as in existence
on the date hereof.
(b) Authorization and Validity of Agreement. The execution and
delivery by Buyer of this Agreement and the consummation by
Buyer of the Transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement
has been duly executed and delivered by Buyer and is the legal
valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
(c) No Conflict. The execution and delivery of this Agreement does
not, and the consummation of the Transactions will not,
conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration
of or "put" right with respect to any obligation or to loss of
a material benefit under, or result in the creation of any
lien or encumbrance upon any of the properties or assets of
Buyer under, any provision of (i) the charter or bylaws of
Buyer, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease, guaranty or other financial
assurance agreement or other agreement, instrument, permit,
concession, franchise or license applicable to Buyer, and
(iii) subject to governmental filing and other matters
referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to Buyer, other than, in the case
of clause (ii), any such conflicts, violations, defaults,
rights or liens or encumbrances that individually or in the
aggregate would not have a Buyer MAE. No consent, approval,
order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign,
including local authorities (a "Governmental Entity"), is
required by or with respect to Buyer in connection with the
execution and delivery of this Agreement by Buyer or the
consummation by Buyer of the Transactions, except for such
consents, approvals, orders, authorizations, registrations,
declarations, filings and notices as are set forth in Schedule
2.1(c).
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(d) No Lawsuits. Buyer warrants that it is not currently a party
to any suit, action, arbitration, or legal, administrative, or
other proceeding, or pending governmental investigation.
(e) Taxes.
(i) all returns and reports, including, without limitation,
information and withholding returns and reports ("Tax Returns"), of
or relating to any foreign, federal, state or local tax, assessment
or other governmental charge ("Taxes" or a "Tax") that are required
to be filed on or before the Closing Date by or with respect to
Buyer, have been or will be duly and timely filed, all such Tax
Returns are or will be true, correct and complete in all material
respects, and all Taxes, including interest and penalties, due and
payable whether or not shown on any such Tax Return have been or
will be duly and timely paid or adequately provided for in reserves
established by Buyer in its consolidated financial statements;
(ii) there is no action, suit, proceeding, or claim now
proposed or pending against or with respect to Buyer in respect to
any Taxes, and no material assessment, deficiency or adjustment has
been asserted or proposed with respect to any Tax Return of or with
respect to Buyer that has not been adequately provided for in
reserves established by Buyer;
(iii) no waiver or extension of any statute of limitations or
the period of assessment or collection of any Taxes relating to any
federal, state, local or foreign Tax matter has been given by or
requested from Buyer and no power of attorney with respect to any
such Taxes has been filed or entered into with any Governmental
Authority, in either case that will be outstanding as of the Closing
Date and the time for filing any Tax Return relating to Buyer has
not been extended to a date later than the date of this Agreement;
(iv) except for statutory liens or encumbrances for current
Taxes not yet delinquent, no liens or encumbrances for Taxes exist
upon the assets of Seller;
b) Representations and Warranties of Seller. Seller hereby, jointly and
severally, represents and warrants to Buyer that:
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(f) Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Texas. Seller has all requisite corporate power and corporate
authority and all necessary governmental authorizations to
own, lease and operate all of its properties and assets and to
carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to
have such governmental authority would not (i) have a Material
Adverse Effect on the assets, properties, business,
operations, or condition (financial or otherwise) of Seller,
taken as a whole or (ii) prevent or materially adversely
affect the ability of Seller to perform and comply with its
obligations under this Agreement, or any other agreement to be
executed and delivered in connection with the Transactions (a
"Seller MAE"). Seller is duly qualified as a foreign
corporation to transact business, and is in good standing, in
each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified does not
and would not have a Seller MAE. Seller is in compliance with
all applicable laws, judgments, orders, rules and regulations,
domestic and foreign, except where failure to be in such
compliance would not have a Seller MAE. Seller has heretofore
delivered to Buyer true and complete copies of Seller's
Certificate of Incorporation (the "Corporate Documents"), and
Seller's Articles of Organization as in existence on the date
hereof.
(g) Capitalization. The authorized capital stock of Seller
consists of 100,000 shares of Seller Stock. As of the date of
this Agreement, there were 4,375 shares of Seller Stock issued
and outstanding. All issued and outstanding shares of Seller
Stock are validly issued, fully paid and non-assessable, were
not issued in violation of any preemptive rights or other
preferential rights of subscription or purchase of any person,
and no holder thereof is entitled to preemptive rights. Seller
is not a party to, and is not aware of, (i) any voting
agreement, voting trust or similar agreement or arrangement
relating to any class or series of its capital stock, or (ii)
any agreement or arrangement providing for registration rights
with respect to any capital stock or other securities of
Seller.
(h) Authorization and Validity of Agreement. Seller has all
requisite corporate power and authority to enter into this
Agreement, and to perform its respective obligations
hereunder. The execution and delivery by Seller of this
Agreement to which it is a party and the consummation by it of
the Transactions have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and
delivered by Seller and is the valid and binding obligation of
Seller enforceable against it in accordance with its terms.
(i) No Approvals or Notices Required; No Conflict with Instruments
to which Seller is a Party. The execution and delivery of this
Agreement does not, and the consummation of the Transactions
and compliance with the provisions hereof and thereof will
not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation
or to loss of a material benefit under, or result in the
creation of any lien or encumbrance upon any of the properties
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or assets of Seller, any provision of (i) the Corporate
Documents of Seller, (ii) except as set forth in Schedule
2.2(d), any loan or credit agreement, note, bond, mortgage,
indenture, lease, guaranty or other financial assurance
agreement or other agreement, instrument, permit, concession,
franchise or license applicable to Seller or any of their
respective properties or assets, and (iii) subject to
governmental filing and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation or arbitration award applicable
to Seller or their respective properties or assets, other than
(A), in the case of clause (ii), any such conflicts,
violations, defaults, rights or liens or encumbrances that
individually or in the aggregate would not have a Seller MAE.
No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental
Entity is required by or with respect to Seller in connection
with the execution and delivery of this Agreement by Seller or
the consummation by Seller of the Transactions.
(j) Commission Filings; Financial Statements. Seller is not a
public corporation and is not required to file any reports,
registration statements and other filings with the Commission.
Each of the Seller's consolidated financial statements
(including any related notes or schedules) (i) was prepared in
accordance with generally accepted accounting principles
applied on a consistent basis (except as may be noted therein
or in the notes or schedules thereto) and (ii) except for
non-compliance that would not have a Seller MAE, complied with
the rules and regulations of the Commission. Such consolidated
financial statements fairly present the consolidated financial
position of Seller as of the dates thereof and the results of
operations, cash flows and changes in stockholders' equity for
the periods then ended (subject, in the case of the un-audited
interim financial statements, to the exclusion of normal
year-end audit adjustments and footnote disclosures). As of
the date hereof, Seller has no liabilities, absolute or
contingent, that may reasonably be expected to have a Seller
MAE, except (i) those incurred in the ordinary course of
business consistent with past operations and not relating to
the borrowing of money and (ii) those set forth in Schedule
2.2(e).
(k) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since the date of the initial Letter of
Intent, except as contemplated by this Agreement or set forth
in Schedule 2.2(e), Seller has conducted its business only in
the ordinary and usual course in accordance with past
practice, and there has not been: (i) a Seller MAE; (ii) to
the knowledge of Seller, any other condition, event or
development that reasonably may be expected to result in a
Seller MAE; (iii) any change by Seller in its accounting
methods, principles or practices; (iv) any revaluation by
Seller of any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of
business and consistent with past practice; (v) any entry by
Seller into any commitment or transaction that would be
material to Seller; (vi) any declaration, setting aside or
payment of any dividends or distributions in respect of the
Seller Stock or any redemption, purchase or other acquisition
of any of its securities; (vii) any damage, destruction or
loss (whether or not covered by insurance) materially
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adversely affecting the properties or business of Seller;
(viii) any increase in indebtedness of borrowed money other
than borrowing under existing credit facilities, the amount of
which is disclosed in Schedule 2.2 (d) and (e); (ix) any
granting of a security interest or lien or encumbrance on any
property or assets of Seller.
(l) Litigation. Except as disclosed in Schedule 2.2(g), there are
no claims, actions, suits, investigations, inquiries or
proceedings, pending or, to the knowledge of Seller,
threatened against Seller any of their respective properties
at law or in equity, wherever located (i) that exist today or
(ii) that would otherwise, if adversely determined, have a
Seller MAE. Seller is not subject to any judicial,
governmental or administrative order, writ, judgment,
injunction or decree. Seller, jointly and severally, agrees to
indemnify and hold Buyer harmless for any damages, costs and
expenses, including reasonable legal fees, for any and all
claims, actions, suits, investigations, inquiries or
proceedings arising out of those items disclosed in Schedule
2.2(g).
(m) Taxes. Except as set forth in Schedule 2.2(h),
(i) all returns and reports, including, without limitation,
information and withholding returns and reports ("Tax Returns"), of
or relating to any foreign, federal, state or local tax, assessment
or other governmental charge ("Taxes" or a "Tax") that are required
to be filed on or before the Closing Date by or with respect to
Seller, have been or will be duly and timely filed, all such Tax
Returns are or will be true, correct and complete in all material
respects, and all Taxes, including interest and penalties, due and
payable whether or not shown on any such Tax Return have been or
will be duly and timely paid or adequately provided for in reserves
established by Seller in its consolidated financial statements,
except where the failure to file Tax Returns or to pay or provide
for Taxes would not result in a Seller MAE;
(ii) the charges, accruals and reserves for Taxes with respect
to Seller reflected in the consolidated financial statements
included in the Seller Commission Filings have been prepared in
accordance with generally accepted accounting principles and are
sufficient to cover the payment of all material Taxes, including any
penalties or interest thereon and whether or not assessed or
disputed, that are, or are hereafter found to be, or to have been,
due with respect to the operations of Seller through the periods
covered thereby and Seller has (and as of the Closing Date will
have) made all estimated tax payments required with respect to Taxes
for Tax Returns not yet due;
(iii) there is no action, suit, proceeding, audit or claim now
proposed or pending against or with respect to Seller in respect to
any Taxes, and no material assessment, deficiency or adjustment has
been asserted or proposed with respect to any Tax Return of or with
respect to Seller that has not been adequately provided for in
reserves established by Seller;
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(iv) no waiver or extension of any statute of limitations or
the period of assessment or collection of any Taxes relating to any
federal, state, local or foreign Tax matter has been given by or
requested from Seller and no power of attorney with respect to any
such Taxes has been filed or entered into with any Governmental
Authority, in either case that will be outstanding as of the Closing
Date and the time for filing any Tax Return relating to Seller has
not been extended to a date later than the date of this Agreement;
(v) except for statutory liens or encumbrances for current
Taxes not yet delinquent, no liens or encumbrances for Taxes exist
upon the assets of Seller;
(vi) Seller is not a party to or bound by or has an obligation
under any written Tax separation, sharing or similar agreement or
arrangement;
(n) Severance Payments. Except as set forth in Schedule 2.2(i),
neither Seller nor any of the Seller Subsidiaries will have
any liability or obligation to pay a severance payment or
similar obligation to any of their respective employees,
officers or directors as a result of the Transactions, nor
will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the
Transactions in the event of the subsequent termination of
their employment.
(o) Brokers. Except as set forth in Schedule 2.2(j), no broker,
investment banker, or other Person acting on behalf of Seller
is or will be entitled to any broker's, finder's or other
similar fee or commission in connection with the Transactions.
(p) Compliance with Laws. Seller hold all required, necessary or
applicable permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities, except
where the failure to so hold could not reasonably be expected
to have a Seller MAE (the "Seller Permits"). All applications
with respect to such Seller Permits, were complete and correct
in all material respects when made and Seller does not know of
any reason why any of such permits, licenses, variances,
exemptions, orders, franchises and approvals would be subject
to cancellation. Seller is in compliance with the terms of the
Seller Permits except where the failure to so comply could not
reasonably be expected to have a Seller MAE. Seller has not
violated or failed to comply with any statute, law, ordinance,
regulation, rule, permit or order of any Federal, state or
local government, domestic or foreign, or any Governmental
Entity, any arbitration award or any judgment, decree or order
of any court or other Governmental Entity, applicable to
Seller or its business, assets or operations, except for
violations and failures to comply that would not have a Seller
MAE.
(q) Contracts. Schedule 2.2(l) contains a complete list of the
following contracts, agreements, arrangements and commitments:
(A) all employment or consulting contracts or agreements to
which Seller is contractually obligated; (B) current leases,
sales contracts and other agreements with respect to any real
property of Seller or to which Seller is contractually
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obligated and current leases, sales contracts or other
agreements with respect to personal property of Seller is
contractually obligated, in each case having (1) a remaining
term of greater than one year or (2) total payments that may
be required of Seller exceeding $10,000; (C) contracts or
commitments for capital expenditures or acquisitions in excess
of $10,000 to which Seller is obligated; (D) agreements,
contracts, indentures or other instruments relating to the
borrowing of money, or the guarantee of any obligation for the
borrowing of money, to which Seller is a party or any of their
respective properties is bound; (E) all material
indemnification and guaranty or other similar obligations
(other than those obligations which occur in the ordinary
course of business) to which Seller is bound; (F) any
outstanding bonds, letters of credit posted or guaranteed by
Seller with respect to any Person, other than those that do
not exceed $10,000 in the aggregate; and (G) any covenants not
to compete or other obligations affecting Seller that would
materially restrict any of them or their affiliates from
engaging in any business or activity. True and correct copies
of all the instruments described in Schedule 2.2(l) have been
furnished or made available to Buyer. Except as noted in
Schedule 2.2(l), all such agreements, arrangements or
commitments are valid and subsisting and Seller, to the extent
each is a party, has duly performed its obligations thereunder
in all material respects to the extent such obligations have
accrued, and no breach or default exists thereunder by Seller
or, to the knowledge of Seller, any other party thereto. There
are no material liabilities of any of the parties to any of
the contracts between Seller and third parties arising from
any breach of or default in any provision thereof, other than
such breaches that, individually or in the aggregate, could
not reasonably be expected to have a Seller MAE, or that would
permit the acceleration of any obligation of any party thereto
or the creation of a lien or encumbrance upon any asset of
Seller.
(r) Title to Property.
(i) Seller has good and indefeasible title to, or valid
leasehold interests in, all of their properties and assets including
all real property and all other properties (tangible or intangible,
real or personal) carried on their books as an asset or used
exclusively by them in their business.
(ii) Seller has complied in all material respects with the
terms of all leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect. Seller
enjoys peaceful and undisturbed possession under all such leases.
(s) Insurance Policies. Schedule 2.2(n) contains a correct and
complete description of all insurance policies of Seller
covering Seller, any employees or other agents of Seller or
any assets of Seller. Each such policy is in full force and
effect, is with responsible insurance carriers and is
substantially equivalent in coverage and amount to policies
covering companies of the size of Seller and in the business
in which Seller is engaged, in light of the risk to which such
companies and their employees, businesses, properties and
other assets may be exposed. All retroactive premium
adjustments under any worker's compensation policy of Seller
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have been recorded in Seller's financial statements in
accordance with generally accepted accounting principles and
are reflected in the financial statements.
(t) Loans. Schedule 2.2(o) sets forth all existing loans, advances
or other extensions of credit (excluding accounts receivable
arising in the ordinary course of business) by Seller to any
party, including inter-company loans, advances, guaranties or
extensions of credit.
ARTICLE 3)
ADDITIONAL AGREEMENTS
3.1 Filings; Consents; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, Seller and Buyer shall (I)make all filings
necessary under the applicable Securities Acts, the Exchange Act, the Texas
Corporations and Partnership Laws and applicable blue sky or similar securities
laws and shall use all reasonable efforts to obtain required approvals and
clearances with respect thereto; (ii) use reasonable efforts to obtain all
consents, waivers, approvals, authorizations, and orders required in connection
with the authorization, execution, and delivery of this Agreement; and (iii) use
reasonable efforts to take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper, or advisable to make
effective as promptly as practicable the Transactions.
a) Notification of Certain Matters. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller, orally and in writing, of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate at any time from the date hereof to
the Closing Date; and (ii) any material failure of Seller or Buyer, as the case
may be, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be compiled with or satisfied by
it hereunder.
3.3 Indemnification of Sellers after the Closing Date. After the
Closing Date, Buyer shall cause to indemnify and hold the individual parties
listed in Exhibit A harmless for any damages, costs and expenses, including
reasonable legal fees, for any and all third-party claims, actions, suits,
investigations, inquiries or proceedings arising after the Closing Date and out
of any actions of said individuals in the ordinary course of business and within
the scope of their employment or affiliation with Buyer as officers, directors,
employees or independent contractors of Buyer.
ARTICLE 4)
CONDITIONS
a) Conditions to Obligations of Each Party. The respective obligations
of each party to consummate the Agreement and the Transactions shall be subject
to the fulfillment of the following conditions:
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(u) That both parties shall enter into employment agreements
mutually acceptable before Closing Date, including pro forma
for coming three years.
(v) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state
court or governmental agency or other foreign, federal or
state regulatory or administrative agency or commission that
would prevent or make illegal the consummation of the
Transactions;
(w) There shall have been obtained any and all material permits,
approvals and consents of any governmental body, commission or
agency that reasonably may be deemed necessary so that the
transactions contemplated thereby will be in compliance with
applicable laws, the failure to comply with which would have a
Seller MAE or Buyer MAE; and
(x) The receipt of all approvals and consents of third persons the
granting of which is necessary for the Transactions
contemplated in connection therewith.
(y) Seller understands and acknowledges that such Buyer Common
Stock to be issued will not be registered under the Securities
Act of 1933 and will be restricted stock under SEC Rule 144
for a period of at least one year from the date of issuance.
Seller acknowledges that the share certificates shall bear
some form of restrictive legend as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
b) Additional Conditions to Obligations of Buyer. The obligation of
Buyer to consummate the Agreement and the Transactions is, at the option of
Buyer, also subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(z) The representations and warranties of Seller in this Agreement
shall be true and correct on the Closing Date as if made on
and as of that date, except for changes with the prior written
consent of Buyer;
(aa) There shall have been no material adverse change in the
assets, properties, business, operations, or condition
(financial or otherwise) of Seller (taken as a whole);
(bb) There shall be no liability or claim existing with respect to
Seller that is material to Seller, taken as a whole, other
than such liabilities or claims the nature and amount of which
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have been disclosed in all material respects in this Agreement
as of the date hereof;
(cc) All of the other terms, conditions, covenants and agreements
to be complied with or performed by Seller under this
Agreement on or before the Closing Date shall have been duly
complied with or performed in all material respects;
(dd) Buyer shall provide evidence of ability to perform closing on
or before September 30th, 2004, or date otherwise established
by Buyer and Seller;
(ee) The Closing Date shall have occurred on or before September
30th, 2004, or date otherwise established by Buyer and Seller;
(ff) Seller shall deliver to Buyer customary closing documents,
each of which shall be dated as of the Closing Date, duly
executed and in a form reasonably satisfactory to Buyer,
including a certificate of Seller's general partner confirming
all of the matters set forth in Sections 4.2(a)-(d);
(gg) There shall not have occurred (i) any suspension or limitation
on trading in securities generally on any Stock Exchange or
the establishment of minimum prices on such Exchange, (ii) a
declaration of a banking moratorium either by Federal or New
York State authorities or (iii) any outbreak or escalation of
hostilities, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of
which on financial markets is such as to make it, in the sole
judgment of Buyer, impractical or inadvisable to proceed with
the consummation of the Transactions contemplated hereby to be
consummated at the Closing Date.
(hh) Closing shall not have occurred before successful closing of
funding by the Buyer, defined as two million ($2M) dollars or
more.
c) Additional Conditions to Obligations of Seller. The obligation of
Seller to consummate the Transactions contemplated by this Agreement is, at the
option of Seller, also subject to the fulfillment at or prior to the Closing
Date of the following conditions:
(ii) The representations and warranties of Buyer contained in Section 2.1
shall be accurate as of the date of this Agreement and (except to the
extent such representations and warranties speak specifically as of an
earlier date) as of the Closing Date as though such representations and
warranties had been made at and as of that time; all the terms,
covenants and conditions of this Agreement to be complied with and
performed by Buyer on or before the Closing Date shall have been duly
complied with and performed in all material respects.
ARTICLE 5)
GENERAL PROVISIONS
a) Survival of Representations, Warranties and Indemnities. The
representations, warranties and indemnities in this Agreement shall survive the
confirmation of the Closing Date until Final Payout.
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b) Public Statements. Seller and Buyer agree to consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby.
c) Assignment. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns.
d) Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Seller:
Xxxxxxxxxxx X. Xxxxxxxxxx
Duration Software Inc.
0000 X. XX
Xxxxx 000
Xxxxxx, Xxxxx 00000
with a copy to:
------------------------
------------------------
------------------------
if to Buyer:
Xx. Xxxxxx X. Xxxxxx
Systems Evolution Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxx 00000
with a copy to:
Xxxxx X. Xxxxx
000 X. Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
or to such other address as any party shall have furnished to the other
by notice given in accordance with this Section 5.4. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefore.
e) Governing Law. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach shall be governed by the laws of the State
of Texas, without regard to conflict of laws principles.
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f) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
g) Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
h) Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
i) Entire Agreement: Third Party Beneficiaries. This Agreement shall
constitute the entire agreement and supersede all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof and neither this nor any document delivered
in connection with this Agreement confers upon any Person not a party hereto any
rights or remedies hereunder.
j) Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any time,
except by an instrument in writing signed on behalf of each party hereto. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
it from seeking redress for breach of this Agreement other than with respect to
the condition so waived.
IN WITNESS WHEREOF, each of the parties caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized and in their
individual capacities, all as of the date first above written.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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BUYER
SYSTEMS EVOLUTION INC.,
a Texas Corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
SYSTEMS EVOLUTION INC.,
An Idaho Corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
SELLER
DURATION SOFTWARE INC.
a Texas Corporation
By: /s/ Xxxxxxxxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
OWNERSHIP OF SELLER
Duration Software Inc.
---------------------------- ---------------------------------------- ----------
Xxxxx X. Xxxxxxxxxx CEO 28.057%
---------------------------- ---------------------------------------- ----------
Xxxxx XxXxxxxxx Director 22.057%
---------------------------- ---------------------------------------- ----------
Xxxxxxx X. Xxxxxxx COO 19.714%
---------------------------- ---------------------------------------- ----------
Xxxxx X. Xxxxxxx Vice President - Technology 17.714%
---------------------------- ---------------------------------------- ----------
D. Xxxxx Xxxxxxx Vice President - Talent & Culture 12.458%
---------------------------- ---------------------------------------- ----------
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EXHIBIT B
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
COUNTY OF XXXXXX September ____, 0000
XXXXX XX XXXXX
FOR VALUE RECEIVED, Systems Evolution Inc., a Texas corporation
("Maker") promises to pay to the order of __________Name___________________ of
__________Address____________________, the principal sum of ________ DOLLARS
($________) payable in three (3) equal installments of __________ Dollars
($________) annually commencing on ________________.
If default be made in the payment when due of any part or installment
of this Note, then the whole sum of the principal will become immediately due
and payable at the option of the holder of this Note, without notice. Further,
if Maker should at any time fail in business or become insolvent, or commit an
act of bankruptcy, or if any writ of execution, garnishment, attachment, or
other legal process is issued against any deposit account of or other property
of the Maker, or if any assessment for taxes against Maker, other than taxes on
real property, is made by the federal or state government, or any department of
the federal or state government, or if Maker fails to notify holder of any
material change in his financial condition, then and in such case all of the
obligations of the Maker will, at the option of the holder, become due and
payable immediately without demand or notice.
In the event of commencement of suit to enforce payment of this Note,
Maker agrees to pay such additional attorneys' fees and court costs as the court
may adjudge reasonable.
This Note is made and enforceable under the laws of the State of Texas.
IN WITNESS OF THIS AGREEMENT, Maker has caused this Note to be
executed.
SYSTEMS EVOLUTION INC.
------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
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SCHEDULES
2.1(c) Consents and Approvals of Buyer
NONE
2.2(d) Bank Liabilities of Seller
o Accounts payable of $ 121,674.16
o Credit cards
o American Express for $2,217.44
o AMEX Optima for $15,089.26
o Bank One Platinum Visa for $7,027.01
o Bank One Visa for $19,786.52
o Bank One Visa2 for $ 21,088.95
o MBNA MasterCard for $23,955.82
o Lines of Credit
o Bank One for $99,639.11
o Sun Trust for $27,955.62
o Payroll liabilities for $25,101.77
2.2(e) Other Liabilities of Seller
o Accrual of $37,500 for profit sharing for payable to employees
other than shareholders. This accrual is grossed up by 8% to
$40,500.00 due to employment taxes add-on.
o Accrual of $5,600 for Seller's 5 year bonus
o Accrual of $39,786.68 for accrued employee vacation (including 8%
add-on)
2.2(g) Litigation
NONE
2.2(h) Taxes
NONE
2.2(i) Severance Payments
NONE
2.2(j) Brokers
NONE
2.2(l) Contracts
Attached in due diligence packet received by the Company the week of
August 23rd, 2004
2.2(n) Insurance Policies
5 buy sell life insurance policies to fund buy sell agreements from
Northwestern Mutual and identical policies from Banner Life in the
amounts of:
o Xxxxx Xxxxxxxxxx $270,000
o Xxxx X. XxXxxxxxx $270,000
o Xxxxx X. Xxxxxxx $180,000
o Xxxxxxx X. Xxxxxxx $180,000
o D. Xxxxx Xxxxxxx $100,000
2.2(o) Advances and Inter-company Loans of Seller
NONE.
2.2(p) Accrued revenues
There will be outstanding accrued revenues not reflected in the A/R which will
be considered within the A/R. This amount is to be determined at close date.
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